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Analytics ROI: It's Not Only About the Money

Analysis  |  By Jonathan Bees  
   December 05, 2019

Gains from analytics are not only about capturing additional margin. Return on investment for analytics can also be about improving the quality of care, reducing costs, and improving efficiency.

The healthcare industry is being remade in radical new ways through the increasing use of sophisticated analytics and artificial intelligence (AI)/machine learning solutions. Providers and payers alike are ramping up their investments in analytics software and human capital, and for good reason.

According to respondents in the November/December 2019 HealthLeaders Intelligence Report, Investing For the Future: Analytics, AI, and ROI, 85% describe their organizations’ return on investment (ROI) on analytics as either acceptable (41%), good (30%), or very good (14%). Only 16% say that it is either poor (12%) or very poor (4%), an indication of the positive return analytics has provided organizations overall.

Todd Stewart, MD, vice president of clinical integrated solutions and clinical informatics at Mercy Technology Services, the IT division of St. Louis–based Mercy, an integrated health system that includes more than 40 hospitals, 900 physician practices and outpatient facilities, and more than 45,000 employees, points out that while analytics certainly offers the potential of financial rewards, the gains are not only about capturing additional margin. ROI can also be about improving the quality of care, reducing costs, and improving efficiency.

“There are two components to ROI,” says Stewart. “There’s the R and then there’s the I. At Mercy, we have a very large effort working on the "I" part of this, which includes manpower, labor, and financial investment. But the "R" is also really, really important. And that gets to the concept of data as an asset. We do quite a bit of work trying to think through that. How do we define it? How do we define return on data, which is essentially what analytics is?”

“We carefully consider both sides of that equation because we want to maximize our mission to deliver quality care, and we cannot do that without generating margin. However, just as our organization may invest in places that we know we’ll never get a financial return, such as establishing a clinic or maintaining a health facility in a rural community, there are aspects of analytics where we know we’ll never get a positive financial return, but we’re going to do it anyway because it is the right thing to do,” he says.

Analytics investment outlook

The outlook for investment in analytics is quite robust, with almost two-thirds of respondents (63%) in our survey indicating that their organizations plan to increase investments in analytics for the next three years, and more than one-third (35%) saying that investments will stay the same. Only 2% say that their investments in analytics will decrease.

Stewart says that Mercy plans on increasing its investment in analytics over the next few years, but he points out that this covers a range of aspects, not just software licenses and hardware.

“I would say that at Mercy the increase is probably not so much in software licensing or hardware-related things,” says Stewart. “The total spend may even go down on the technology and software side, but we expect to invest a lot more on the people and process side.”

“The technology alone will never deliver the answer. It will always involve people and processes,” he says.

To download the full November/December 2019 HealthLeaders Intelligence Report, click here.

Jonathan Bees is a research analyst for HealthLeaders.


Almost two-thirds of survey respondents in the 2019 November/December HealthLeaders Intelligence Report indicate that their organizations plan to increase investments in analytics for the next three years.

One healthcare system executive says increasing investments in analytics at his organization is "not so much in software licensing or hardware-related things," but also investing more in people and processes.

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